ARTICLES


Cokmerce MAgazine May 2010

Herten, Burstein, Sheridan, Cevasco, Bottinelli, Litt & Harz, LLC

 By Gianfranco A. Pietrafesa, Esq. Member

Gianfranco A. PietrafesaOur client was making a multi-million dollar investment in a corporation. Although it would own a significant portion of the corporation, it would be a minority owner with no control over the corporation. It was, therefore, concerned about protecting its investment.  We were able to negotiate several provisions into a stockholders' agreement to govern the corporation and protect our client's interests. Among other things, our client received representation on the board of directors and was required to be present for the board to have a quorum to take action. Our client also had to give its consent before the corporation took certain action, such as awarding compensation to officers and key employees, entering into agreements outside the ordinary course of business, borrowing money, issuing shares of stock, and pursuing mergers and acquisitions. In the event that our client's relationship with the controlling stockholders did not work as they intended, our client also had a means of exiting the corporation. It had a "put right," which gave it the right to force the corporation to purchase our client's shares based on a price determined in accordance with a formula in the stockholders' agreement.

 

As printed in Commerce Magazine May, 2010

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